eBay Inc. Q3 2012 results round up

In the last few years, there has been a familiar ring to the eBay quarterly results: PayPal is fuelling the growth, but the Marketplaces business is lagging. That’s not the case with Q3 2012. The marketplaces chunk of the business, has enjoyed some very encouraging growth.

“We had a great third quarter across our company, with Marketplaces and PayPal accelerating customer growth,” said John Donahoe, President and CEO of eBay Inc.. “Mobile continues to be a game changer for us, and we continue to be a clear leader in mobile commerce and payments. With our strong portfolio and global reach, we are consistently demonstrating our capabilities to help consumers shop anytime, anywhere. And we are enabling retailers of all sizes to compete in a rapidly evolving, multichannel commerce environment.”

As is usual, we leave it to people cleverer than us to analyse and dice the results for those who want expert opinion.

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Martry says

I think everyone just copies what they wrote the prior quarter. I look at the bigger picture.

In 2005 before the 7 year turnaround plan the 3rd quarter had 11 billion in GMV. In 2012 7 years later it was 16 billion. Growth over 7 years of 45%.

In that same time period E-commerce grew 125%, Amazon grew top line 500%, and Etsy grew 70% in 2011 alone.

Of that 45% growth Ebay shows in GMV, a slice of that is just the added shipping in the many more free shipping items on Ebay since 2005. Some 40-50% of items now have free shipping up from almost none. If shipping costs are 30% of total sales price and 50% more items offer free shipping than thats 15% in “phony growth”(as an example). While we dont know the exact number we do know it is part of the GMV growth.

Earnings… back in 2005 Paypal paid 5% on funds, listings for many larger sellers in store format cost 3 cents. The addition of shipping to the commission base inflated the “take rate” on transactions.

In 2005 the user base was 42% active in any given month, last time we could figure it out from ebay stats is was 17% recently.

I believe ebay killed their referral engine during the last 7 years. I also think paypal had a serious issue with the delay in releasing their HERE device which allowed Square to get 75% of their non-ebay payment volume. Paypal also announced 400 layoffs recently.

My point here is not to bash ebay but to avoid the spin. I think Ebay missed the big picture, the incredibly strong,loyal user base, it totally blew the chance to knock LOCAL out of the park, and lost a lot of momentum. As a big company, it can squeeze more and more out of its base for a period of time, but I see less than e-commerce growth.

Additionally the company has been making a lot of “fluff” announcements. Take Mobile growth. Sounds good but its just like saying more people use cell phones than land lines to buy things. The incremental new business is not that huge. Also the Paypal France Mcdonalds deal…. I mean will people really stand in a special line just to use paypal? Or the Discover deal… If people already have visa and debit cards and even a paypal card they can use as a mastercard or visa, why would they want to do things differently just to pay with paypal? Go to Home Depot, ask the clerks how many people use paypal..

Come on, no one does real investigative stuff anymore…

In my world, a loyal customer base would have had ebay in the position to blow it out of the park with mobile, local and sales. At best , with all the tweaking they have , over 7 years grown less than half the rate of e-commerce…

Marty says

1:48 pm on 06/11/2012

to continue… Im not the only one that feels this way…

Given the info above, keep this in mind..

Over this time period Ebay’s stock is still 15% below its high of about $60 a share, while Amazon is up 500%.

Marty

Gary says

2:59 pm on 06/11/2012

“Also the Paypal France Mcdonalds deal…. I mean will people really stand in a special line just to use paypal?”

Those who have been to a French Mcdonalds will be aware that they are streets ahead of their UK counterparts technology and service wise.

Mcdonalds France use mobile hand held order and card payment machines and order takers come up to you in the customer queue and take your order and payment before you even arrive at the counter. All you then have to do is collect your food.

This frees up staff behind the counter to produce food and drink only and not faff around taking orders and payments.

They also have seperate coffee shop and breakfast counters.

Agree that ebay growth performance is shockingly poor relative to overall ecommerce growth. ebay are now lagards rather than leaders. They just don’t get it that massive outlet type customers are not growth drivers. They simply sell the same that can be purchased in 100’s of places online.

Gary says

3:12 pm on 06/11/2012

Do ebay actually include “free” shipping costs in their sales figures and exclude “paid for shipping” from their sales figures?

If they do this without any qualification then this is a massive manipulation of their accounting presentation to investors and something that the Securities and Exchange Commission in the USA would take a serious interest in if this is indeed the case.

JD says

3:20 pm on November 6th, 2012

eBay have ‘sold’ the shipping and take fees on the inclusive price so I do not see how it is manipulation.

It’s the sellers that take any hit not the shareholders.

Gary says

4:24 pm on 06/11/2012

Sales figures are based on turnover which is sale of product. Fees earnt are reported elsewhere. It is the volume of sales on a like for like that investors look at. Think Tesco and what happened to them earlier this year when like for like sales fell just 1.5% in their main market the UK.

Getting back to ebay:-

One year this like for like excludes shipping.

The next year you report a rise in like for like of 15% but this includes shipping.